If there’s one project that’s on a massive hype wave, it’s VeChain. In this short article we look at whether it really has an interesting foundation.
A solution for the supply chain, counterfeiting, fraud and loss
Started in 2015 and launched in 2016, VeChain is the blockchain project of, among others, Sunny Lu. He was previously the CIO of Luis Vuitton’s Chinese arm. In his own words, there he was confronted with the supply chain problems of the luxury brand. It is precisely this problem that Sunny Lu wants to tackle with VeChain.
He saw that a lot of money, time and energy is lost due to fraud, counterfeiting and general loss of products. VeChain wants to put the focus of its blockchain on supply chain and product tracking. We are all familiar with examples of products that, while looking authentic at first glance, turn out to be of inferior quality on closer examination.
The blockchain developed is called VeChainThor and is characterized by its high degree of transparency as a business ecosystem. It gives users to the network the ability to give goods a blockchain identity that can be used to track the entire life cycle of a product.
Every step in the development of the product or every step in the logistics process can be followed thanks to the implementation in the VeChainThor blockchain. Physical products are given an RFID, QR or NFC unique identity with which, once stored in the blockchain, it is impossible to commit fraud. That is the power of blockchain.
VeChain’s dual token system
The VeChainThor blockchain uses two currencies, the VeChain token and the VeChainThor Energy or VeThor. Where VET is rather the investment token and is used to send value over the network (they themselves call it “Smart Money”), the VTHO is the “gas” token that facilitates the transactions.
In other words, you need VTHO to get data into the blockchain and you will need VET if you want to become a validated part of the VeChainThor network. The dual token system is similar to that of NEO and GAS. VET tokens are limited in number (+/- 86 billion) while VTHO tokens are not. Owners of VET tokens can stake them and earn a certain amount of VTHO.
Validators and nodes in the VeChainThor blockchain
To make the network work successfully, various types of nodes have been created, with Authority Masternodes (AMs) at the top. The 101 AMs have been chosen by VeChain itself and are required to own and maintain a minimum of 25 million VET. In return, they are given the right to make decisions about network decisions.
There are also Economic X Nodes and Economic Nodes that require less staked VET tokens (between 600k and 15.6 million VET) and receive different, less decisive voting rights in return. These have been created to make the community more part of the network and to achieve a greater degree of decentralization.
All these nodes generate an amount of VTHO in exchange for their delivered validations thanks to the staking. It is not unimportant to mention that all these nodes meanwhile keep a large amount of VET tokens from the public market, which in turn leads to a greater form of scarcity and therefore possible price increase.
Blockchain as a Service solution (BaaS) with ToolChain
The product that VeChain offers to companies is called ToolChain. That company can be a global multinational or an SME from behind the corner. There are opportunities for simplification, professionalization and fraud prevention for every company thanks to the power of the underlying blockchain technology.
VeChain is therefore a hyped project because they solve a real-world problem and already have ready-to-use products and options on offer. The project’s tokenomics are cleverly put together and have helped ensure that the value of both tokens has already come a long way towards the moon in recent months.